Page 478 - MANUAL OF SOP

Countervailing Duty Investigations

(ii) if it is an export subsidy i.e. the subsidy is contingent on export performance;
or
(iii) if it is based on the use of domestic goods over imported ones.

BY GOVERNMENT OR PUBLIC BODY

20.12 As already stated above, in order for a financial contribution to be a
subsidy, it must be made by or at the direction of a government or any public body
within the territory of a member country. Thus, the SCM Agreement applies not
only to measures of national governments but also to measures of sub-national
governments (the governments of the different provinces and municipalities in
which the producers/exporters are located) and of such public bodies as state-
owned companies. However, the financial contribution must be by a government
body in the nature of a Federal, Regional, Municipal or Public Body such as the
National Bank, National Power Company, or where the Government entrusts or
directs a private body to make a financial contribution .
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20.13 It may be clarified that all financial contributions by the government may
not constitute a subsidy. Part 1 of Annexure III contains an illustrative list of what
amounts to export subsidies. A financial contribution by a government is not a
subsidy unless it confers a “benefit”. Few examples of the term ‘benefit’ based on
WTO jurisprudence are as follows:

(i) An advantage to the recipient, not cost to the Government (If financial
contribution places the recipient in a more advantageous position than it
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would have been, but for the financial contribution) ;
(ii) If the financial contribution is provided on terms which are more
advantageous than those that would have been available to the recipient
from the market;
(iii) Investment by the Government inconsistent with the usual investment
practices;

(iv) Government loans confer a benefit if there is a difference between the
amount the recipient of the loan pays on the loan and the amount the

8 See Appellate Body Report, United States-Definitive Anti-Dumping and Countervailing Duties on Certain Products
from China, WTO Doc. WT/DS379/AB/R , (Mar.11, 2011) [hereinafter, US – Anti-Dumping and Countervailing Duties
(China) ]
9 See Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WTO Doc. WT/DS70/AB/R,
(Aug. 2, 1999).

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